A misleading TV ad?! Say it ain’t so!
While the shock value may have limited punch, Sen. Susan Collins and others are correct to call out General Motors for its recent television advertisements in which GM’s CEO Ed Whitacre suggests his company is standing on its own two feet again.
In the advertisement, and in an OpEd in the Wall Street Journal, he concedes that he understands why many Americans opposed the government bailout of his GM.
“A lot of Americans didn’t agree with giving GM a second chance. Quite frankly, I can respect that,” he says in the commercial. “We want to make this a company all Americans can be proud of again. That’s why I’m here to announce we have repaid our government loan — in full — with interest, five years ahead of the original schedule.”
The ad continues to tout GM “putting people back to work” designing and building safe, reliable and energy-efficient vehicles.
The ad should elicit a sense of optimism in even the most pessimistic Americans, about both the economy and the fate of GM, a company that was once seen as a barometer of U.S. business.
Some Republicans in Congress, including Sen. Collins, were right to object. In an April 29 letter to Mr. Whitacre, Reps. Darrell Issa and Jim Jordan, ranking members of the House Committee on Oversight and Government Reform, wrote: “The details of GM’s so-called repayment, however, demonstrate that your statements and the slick marketing campaign built around them constitute a lie to the American people, who have spent more than $50 billion to bail out GM and currently own over 60 percent of the company.”
Reps. Issa and Jordan go so far as to accuse Whitacre of coming “dangerously close to committing fraud,” by suggesting the company’s value is greater than it is.
As of the end of March, the letter notes, the U.S. Treasury had $52.4 billion committed to GM — including $17.4 billion in an escrow account — in exchange for the company giving the government 60 percent equity in GM stock. In November, GM disclosed that it planned to use the “taxpayer money in the escrow account to finish paying back the original $7.1 billion loan,” the letter asserted.
Reps. Issa and Jordan also suggest GM may have accelerated the payback so it could apply for federal low-interest loans to retool its plants.
“Deceptive and dishonest advertisements and statements … further destroy the credibility of GM with the American public,” the members wrote.
Whether or not GM’s actions constitute fraud is perhaps less important than the lessons that should be learned from the cross-species marriage of government and private industry, which are that it’s messy, the parts don’t fit together well and the offspring are of dubious pedigree.